Thales (HO) AI Stock Analysis

• Market Cap: €51.48B
• Dividend Yield: 2.51%
• Average Volume (3M): 297.16K
• Price to Earnings (P/E): 49.7
• Beta (1Y): 0.57
• Revenue Growth: 11.66%
• EPS Growth: 3.13%
• Country: FR
• Employees: 78,189
• Sector: Technology
• Sector Strength: 94
• Industry: Aerospace & Defense
• EPS (TTM): 4.48
• Shares Outstanding: 205,941,910
• 10 Day Avg. Volume: 224,866
• 30 Day Avg. Volume: 297,156
• PEG Ratio: -1.93
• Price to Book (P/B): 6.78
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 26.12
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €259.86
• Price Target Upside: 3.74% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 7

• Rating: 74 Outperform
• Price Target: €281.00 ▲(12.18%Upside)

Thales's impressive financial performance, highlighted by strong revenue growth, profitability, and cash flow generation, is a major strength. The optimistic guidance and strategic achievements from the earnings call further boost confidence. However, the high valuation and challenges in specific business segments slightly weigh on the overall score.

Positive Factors

Defense and Avionics Performance

Continued strength in Defense and Avionics contributes to growth.

Organic Sales Growth

Sales are projected to increase by 7.3% organically.

Negative Factors

Defense Orders Impact

Orders driven down by Defense down 58% which should limit the share performance on an otherwise solid sales release.

Order Performance

Orders are softer than expected, and down 25% year over year to €3.78bn.

Thales Business Overview & Revenue Model

Company Description

Thales S.A. provides various solutions for civilian and military customers in the aeronautics, space, defense, security, ground transportation, and digital security markets worldwide. It operates through Aerospace, Transport, Defence & Security, and Digital Identity & Security segments. The company offers communications, command, and control systems; mission services and support; protection and mission/combat systems; surveillance, detection, and intelligence systems; training and simulation solutions for air, land, naval, and joint forces; and digital identity and security solutions. It also provides air traffic management solutions; flight decks and avionics equipment and functions; in-flight entertainment and connectivity systems and services; electrical systems; aerospace training solutions; navigation solutions; support and services for avionics equipment; and vision systems. In addition, the company designs, operates, and delivers satellite-based systems for telecommunications, navigation, earth observation, environmental management, exploration, and science and orbital infrastructures; signaling, communications and supervision, and fare collection management systems and related services; cybersecurity and railway digitalization systems; and main line rail, and urban and intermodal mobility solutions. Further, it provides solutions for various markets and applications, including radiology, radio frequency, microwave sources, training and simulation solutions, lasers, and microelectronics solutions for science, industry, space, defense, automotive, railways, and energy conversion platforms. Thales S.A. has a strategic agreement with Google LLC. The company was formerly known as Thomson-CSF and changed its name to Thales S.A. in 2000. Thales S.A. was founded in 1893 and is headquartered in Courbevoie, France.

How the Company Makes Money

Thales makes money primarily through the sale of its products and services across its four main business sectors: Aerospace, Defense & Security, Digital Identity & Security, and Ground Transportation. In the Aerospace sector, Thales provides avionics and air traffic management solutions, generating revenue through long-term contracts with airlines and aviation authorities. The Defense & Security sector contributes significantly to Thales's earnings through defense electronics, systems integration, and cybersecurity services, often through government contracts and partnerships. In the Digital Identity & Security sector, Thales offers digital security solutions, including biometric systems and secure transactions, which are sold to both governmental and private entities. Lastly, the Ground Transportation sector focuses on rail signaling and control systems, where revenue is generated from transportation authorities and infrastructure projects. Strategic partnerships, research and development investments, and a strong focus on technological innovation further bolster Thales's revenue streams.

Thales Financial Statement Overview

Summary

Thales demonstrated strong financial performance with notable revenue and profit growth, improved operational efficiency, and robust cash flow generation. The elimination of debt significantly bolstered financial stability, although the high liabilities-to-assets ratio requires monitoring.

Income Statement

Thales has demonstrated strong revenue growth with a notable increase from €18.43 billion in 2023 to €20.58 billion in 2024, marking an 11.65% growth. The gross profit margin remained high at 26.11% for 2024, indicating efficient cost management. The net profit margin improved significantly from 5.55% in 2023 to 6.90% in 2024, reflecting enhanced profitability. EBIT and EBITDA margins also improved, suggesting operational efficiency gains.

Balance Sheet

Thales's balance sheet is robust with a strong equity position. The debt-to-equity ratio improved significantly, as total debt was eliminated in 2024, reducing financial risk. Return on equity (ROE) improved to 18.89% in 2024, indicating effective use of shareholder funds. However, the equity ratio was 18.80%, suggesting a relatively high level of liabilities compared to assets, which requires monitoring.

Cash Flow

Thales exhibited excellent cash flow management with a substantial increase in free cash flow from €0.97 billion in 2023 to €2.01 billion in 2024, a growth of 107.54%. The operating cash flow to net income ratio was strong at 1.86, indicating robust cash generation relative to accounting profits. The free cash flow to net income ratio also improved, reinforcing the company's ability to generate cash.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	20.58B	18.43B	17.57B	16.19B	16.99B
Gross Profit	5.37B	4.77B	4.46B	4.03B	3.94B
EBITDA	2.67B	2.46B	2.29B	2.17B	1.65B
Net Income	1.42B	1.02B	1.12B	1.09B	483.40M
Balance Sheet
Total Assets	39.99B	38.79B	34.42B	32.84B	31.81B
Cash, Cash Equivalents and Short-Term Investments	4.77B	4.08B	5.30B	5.05B	5.00B
Total Debt	7.82B	8.43B	5.47B	5.92B	7.60B
Total Liabilities	32.43B	31.82B	27.04B	26.12B	26.50B
Stockholders Equity	7.52B	6.83B	7.17B	6.48B	5.11B
Cash Flow
Free Cash Flow	2.01B	970.80M	2.56B	2.26B	950.20M
Operating Cash Flow	2.64B	1.60B	3.06B	2.71B	1.35B
Investing Cash Flow	-62.80M	-4.23B	-1.21B	-493.40M	-386.40M
Financing Cash Flow	-2.00B	1.59B	-1.77B	-2.17B	1.20B

Thales Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 250.50
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:HO, the sentiment is Positive. The current price of 250.5 is above the 20-day moving average (MA) of 246.13, below the 50-day MA of 251.65, and above the 200-day MA of 197.05, indicating a neutral trend. The MACD of -0.23 indicates Negative momentum. The RSI at 52.12 is Neutral, neither overbought nor oversold. The STOCH value of 41.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FR:HO.

Thales Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HO	74 Outperform	€51.48B	49.67	14.05%	2.51%	11.66%	3.13%
Sector *	57 Neutral	HK$14.24B	5.26	-5.75%	5.39%	9.34%	-42.23%
EXALF	―	$2.08B	―	-2.92%	―	―	―
EADSF	―	$171.31B	36.42	21.75%	1.55%	―	―
0IAX	―	€23.08B	25.10	15.30%	1.60%	―	―
0EKE	―	€1.78B	31.77	5.80%	1.00%	―	―
0IU8	―	€118.90B	62.29	-6.13%	1.02%	―	―

Thales Corporate Events

Thales Strengthens Board with Strategic Appointments

Thales has announced two new appointments to its Board of Directors, welcoming Valérie Guillemet as a board member and Eric Trappier to the Strategy & CSR Committee. The changes follow recommendations from Dassault Aviation and include additional roles for Anne-Marie Hunot-Schmit and Stéphane Jubault in various committees. These appointments are expected to influence Thales’ strategic direction and corporate governance, which may impact stakeholders and the company’s positioning in the industry.